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Investment Strategy
Blue Harbour’s approach to investing in the public markets is similar in many respects to private equity investors. In this regard, Blue Harbour’s investment approach seeks to add value by working collaboratively with company management to design and to implement strategic initiatives that unlock and create shareholder value. We focus on U.S. public companies that could create significant value by implementing strategic or financial change. Much like private equity investors, a critical component of our strategy is to support superior management teams who are committed to creating value for shareholders. Importantly, unlike private equity investors, Blue Harbour’s mandate to invest in publicly traded securities affords us the advantages of not paying control premiums nor are we subject to the illiquidity and leverage of private equity models.
- We source investment opportunities primarily through publicly traded markets but can also buy equity stakes directly from the issuer if appropriate
- We acquire a significant minority stake and become a lead shareholder
- We acquire our positions at the public market price instead of by auctions
- We collaborate with company management on critical strategic and financial issues
Value Added
With a longer term perspective than most public investors, we are able to partner with company management and develop value-enhancing strategies. Our objective in assisting companies with these strategic initiatives is to act as a partner in order to unlock and create shareholder value over a multi-year time horizon:
Assist With Strategic Corporate Decision-Making
Blue Harbour identifies investments in companies that are in a position to implement strategic changes within the enterprise. Strategic acquisitions, divestitures, spin-offs, asset sales and other transactions can often be used to improve the overall value of the corporate enterprise. We believe we can assist management in effectively creating and executing such strategies.
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Assist With Capital Allocation and Efficiency
Blue Harbour believes opportunities exist to create value through an intense focus upon the application and management of capital within the enterprise. This includes investigating the use of share repurchases, special dividends, recapitalizations, going-private transactions, REITs, MLPs, securitization transactions, and a focus on the allocation of capital, the management of cash flow, as well as the management of the overall corporate balance sheet.
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Investment Criteria
Blue Harbour focuses on identifying U.S. and Canadian companies that are well-managed but fundamentally undervalued. Our portfolio companies are high quality businesses with attractive valuations. These are companies that trade at low multiples of free cash flow or asset rich companies. Investment candidates must demonstrate good industry dynamics, sustainable franchises and recurring free cash flow business models.
We believe the edge to Blue Harbour’s investment strategy is our skill to actively create and unlock value within these opportunities
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